EN BANC
[G.R. No. 124360.November 5, 1997]
FRANCISCO S. TATAD,petitioner,vs. THE SECRETARY OF THE
DEPARTMENT OF ENERGY AND THE SECRETARY OF THE DEPARTMENT OF
FINANCE,respondents.
[G.R. No. 127867.November 5, 1997]
EDCEL C. LAGMAN, JOKER P. ARROYO, ENRIQUE GARCIA, WIGBERTO
TANADA, FLAG HUMAN RIGHTS FOUNDATION, INC., FREEDOM FROM DEBT
COALITION (FDC), SANLAKAS,petitioners,vs. HON. RUBEN TORRES in his
capacity as the Executive Secretary, HON. FRANCISCO VIRAY, in his
capacity as the Secretary of Energy, CALTEX Philippines, Inc.,
PETRON Corporation and PILIPINAS SHELL Corporation,respondents.
D E C I S I O N
PUNO,J.:The petitions at bar challenge the constitutionality of
Republic Act No. 8180 entitled "An Act Deregulating the Downstream
Oil Industry and For Other Purposes."[1]R.A. No. 8180 ends twenty
six (26) years of government regulation of the downstream
oilindustry.Few cases carry a surpassing importance on the life of
every Filipino as these petitions for the upswing and downswing of
our economymaterially depend on the oscillation of oil.
First, the facts without the fat.Prior to 1971, there was no
government agency regulating the oil industry other than those
dealing with ordinary commodities.Oil companies were free to enter
and exit the market without any government interference.There were
four (4) refining companies (Shell, Caltex, Bataan Refining Company
and Filoil Refining) and six (6) petroleum marketing companies
(Esso, Filoil, Caltex, Getty, Mobil and Shell), then operating in
the country.[2]In 1971, the country was driven to its knees by a
crippling oil crisis.The government, realizing that petroleum and
its products are vital to national security and that their
continued supply at reasonable prices is essential to the general
welfare, enacted the Oil Industry Commission Act.[3]It created
theOil Industry Commission(OIC) toregulatethe business of
importing, exporting, re-exporting, shipping, transporting,
processing, refining, storing, distributing, marketing and selling
crude oil, gasoline, kerosene, gas and other refined petroleum
products.The OIC was vested with thepower to fixthe marketpricesof
petroleum products, to regulate the capacities of refineries, to
license new refineries and to regulate the operations and trade
practices of the industry.[4]In addition to the creation of the
OIC, the government saw the imperious need for a more active role
of Filipinos in theoil industry.Until the early seventies, the
downstream oil industry was controlled by multinational
companies.All the oil refineries and marketing companies were owned
byforeignerswhose economic interests did not always coincide
withthe interest of the Filipino.Crude oil was transported to the
country by foreign-controlled tankers. Crude processing was done
locally by foreign-owned refineries and petroleum products were
marketed through foreign-owned retail outlets.On November 9, 1973,
President Ferdinand E. Marcos boldly created the Philippine
National Oil Corporation (PNOC) to break the control by foreigners
of our oil industry.[5]PNOC engaged in the business of refining,
marketing, shipping,transporting, and storing petroleum. It
acquired ownership of ESSO Philippines and Filoil to serve as its
marketing arm.It bought the controlling shares of Bataan Refining
Corporation, the largest refinery in the country.[6]PNOC later put
up its own marketing subsidiary -- Petrophil.PNOC operated under
the business name PETRON Corporation.For the first time, there was
a Filipino presencein the Philippine oil market.
In 1984,President Marcos through Section 8 ofPresidential Decree
No. 1956, created theOil Price Stabilization Fund(OPSF) to cushion
the effects offrequent changes in the price of oil caused by
exchange rate adjustments or increase in the world market prices of
crude oil and imported petroleum products.The fund is used (1) to
reimburse the oil companies for cost increases in crude oil and
imported petroleum products resulting from exchange rate adjustment
and/or increase in world market prices of crude oil, and (2) to
reimburse oil companies for cost underrecovery incurred as a result
of the reduction of domestic prices of petroleum products.Under the
law, the OPSF may be sourced from:
1.any increase in the tax collection from ad valorem tax or
customs duty imposed on petroleum products subject to tax under
P.D. No. 1956 arising from exchange rate adjustment,
2.any increase in the tax collection as a result of the lifting
of tax exemptions of government corporations, as may be determined
by the Minister of Finance in consultation with the Board of
Energy,
3.any additional amount to be imposed on petroleum products to
augment the resources of the fund through an appropriate order that
may be issued by the Board of Energy requiring payment of persons
or companies engaged in the business of importing, manufacturing
and/or marketing petroleum products, or
4.any resulting peso costs differentials in case the actual peso
costs paid by oil companies in the importation of crude oil and
petroleum products is less than the peso costs computed using the
reference foreign exchange rate as fixedby the Board of
Energy.[7]By 1985, only three (3)oil companies were operating in
the country-- Caltex, Shell and the government-owned PNOC.
InMay, 1987,President Corazon C. Aquino signed Executive Order
No. 172 creating theEnergy Regulatory Boardto regulate the business
of importing, exporting, re-exporting, shipping, transporting,
processing, refining, marketing and distributing energy resources
"when warranted and only when public necessity requires."The Board
had the following powers and functions:
1.Fix and regulate the prices of petroleum products;
2.Fix and regulate the rate schedule or prices of piped gas to
be charged by duly franchised gas companies which distribute gas by
means of underground pipe system;
3.Fix and regulate the rates of pipeline concessionaries under
the provisions of R.A. No. 387, as amended x x x;
4.Regulate the capacities of new refineries or additional
capacities of existing refineries and license refineries that may
be organized after the issuance of (E.O. No. 172) under such terms
and conditions as are consistent with the national interest;
and
5.Whenever the Board has determined that there is a shortage of
any petroleum product, or when public interest so requires, it may
take such steps as it may consider necessary, including the
temporary adjustment of the levels of prices of petroleum products
and the payment to the Oil Price Stabilizaton Fund x x x by persons
or entities engaged in the petroleum industry of such amounts as
may be determined by the Board, which may enable the importer to
recover its cost of importation.[8]OnDecember 9,
1992,Congressenacted R.A. No. 7638 which created theDepartment of
Energyto prepare, integrate, coordinate, supervise and control all
plans, programs, projects, and activities of the government in
relation to energy exploration, development, utilization,
distribution and conservation.[9]The thrust of the Philippine
energy program under the law was towardprivatizationof government
agencies related to energy,deregulationof the power and energy
industry and reduction of dependency on oil-fired plants.[10]The
law also aimed to encourage free and active participation and
investment by the private sector in all energy activities.Section
5(e) of the law states that "at the end of four (4) years from the
effectivity of this Act, the Department shall, upon approval of the
President, institute the programs andtimetable of deregulationof
appropriate energy projects and activities of the energy
industry."
Pursuant to the policies enunciated in R.A. No. 7638, the
government approved theprivatization of Petron Corporationin
1993.On December 16, 1993, PNOC sold 40% of its equity in Petron
Corporation to the Aramco Overseas Company.
InMarch 1996, Congress took the audacious step ofderegulating
the downstream oil industry.It enactedR.A. No. 8180, entitled the
"Downstream Oil Industry Deregulation Act of 1996."Under the
deregulated environment, "any person or entity may import or
purchase any quantity of crude oil and petroleum products from a
foreign or domestic source, lease or own and operate refineries and
other downstream oil facilities and market such crude oil or use
the same for his own requirement," subject only to monitoring by
the Department of Energy.[11]The deregulation process has two
phases:the transition phase and the full deregulation phase.During
the transition phase,controls of the non-pricing aspectsofthe oil
industry were to be lifted.The following were to be
accomplished:(1) liberalization of oil importation, exportation,
manufacturing, marketing and distribution, (2) implementation of an
automatic pricing mechanism, (3) implementation of an automatic
formula to set margins of dealers and rates of haulers, water
transport operators and pipeline concessionaires, and (4)
restructuring of oil taxes.Upon full deregulation,controls on the
price of oiland the foreign exchange coverwere to be lifted and the
OPSF was tobe abolished.
The first phase of deregulation commenced on August 12,
1996.
On February 8, 1997, the President implemented the full
deregulation of the Downstream Oil Industry through E.O. No.
372.The petitionsat bar assail the constitutionality of various
provisions of R.A. No. 8180 and E.O. No. 372.
In G.R. No. 124360, petitioner Francisco S. Tatad seeks the
annulment of section 5 (b) of R.A. No. 8180.Section 5 (b)
provides:
"b)Any law to the contrary notwithstanding and starting with the
effectivity of this Act, tariff duty shall be imposed and collected
on imported crude oil at the rate of three percent (3%) and
imported refined petroleum products at the rate of seven percent
(7%), except fuel oil and LPG, the rate for which shall be the same
as that for imported crude oil:Provided, That beginning on January
1, 2004 the tariff rate on imported crude oil and refined petroleum
products shall be the same:Provided, further, That this provision
may be amended only by an Act of Congress."
The petition is anchored on threearguments:
First,that the imposition of different tariff rates on imported
crude oil and imported refined petroleum products violates the
equal protection clause.Petitioner contends that the 3%-7% tariff
differential unduly favors the three existing oil refineries and
discriminates against prospective investors in the downstream oil
industry who do not have their own refineries and will have to
source refined petroleum products from abroad.
Second, that the imposition of different tariff rates does not
deregulate the downstream oil industry but instead controls the oil
industry, contrary to the avowed policy of the law.Petitioner avers
that the tariff differential between imported crude oil and
imported refined petroleum products bars the entry of other players
in the oil industry because it effectively protects the interest of
oil companies with existing refineries.Thus, it runs counter to the
objective of the law "to foster a truly competitive market."
Third,that the inclusion of the tariff provision in section 5(b)
of R.A. No. 8180 violates Section 26(1) Article VI of the
Constitution requiring every law to have only one subject which
shall be expressed in its title.Petitioner contends that the
imposition of tariff rates in section 5(b) of R.A. No. 8180 is
foreign to the subject of the law which is the deregulation of the
downstream oil industry.
In G.R.No. 127867, petitioners Edcel C. Lagman, Joker P. Arroyo,
Enrique Garcia, Wigberto Tanada, Flag Human Rights Foundation,
Inc., Freedom from Debt Coalition (FDC) and Sanlakas contest the
constitutionality of section 15 of R.A. No. 8180 and E.O. No.
392.Section 15 provides:
"Sec. 15.Implementation of Full Deregulation.--Pursuant to
Section 5(e) of Republic Act No. 7638, the DOE shall, upon approval
of the President, implement the full deregulation of the downstream
oil industry not later than March 1997.As far as practicable, the
DOE shall time the full deregulation when the prices of crude oil
and petroleum products in the world market are declining and when
the exchange rate of the peso in relation to the US dollar is
stable.Upon the implementation of the full deregulation as provided
herein, the transition phase is deemed terminated and the following
laws are deemed repealed:
x x x
E.O. No. 372 states in full,viz.:
"WHEREAS, Republic Act No. 7638, otherwise known as the
"Department of Energy Act of 1992," provides that, at the end of
four years from its effectivity last December 1992, "the Department
(of Energy) shall, upon approval of the President, institute the
programs and time table of deregulation of appropriate energy
projects and activities of the energy sector;"
WHEREAS, Section 15 of Republic Act No. 8180, otherwise known as
the "Downstream Oil Industry Deregulation Act of 1996," provides
that "the DOE shall, upon approval of the President, implement full
deregulation of the downstream oil industry not later than March,
1997.As far as practicable, the DOE shall time the full
deregulation when the prices of crude oil and petroleum products in
the world market are declining and when the exchange rate of the
peso in relation to the US dollar is stable;"
WHEREAS, pursuant to the recommendation of the Department of
Energy, there is an imperative need to implement the full
deregulation of the downstream oil industry because of the
following recent developments:(i) depletion of the buffer fund on
or about 7 February 1997 pursuant to the Energy Regulatory Board's
Order dated 16 January 1997;(ii) the prices of crude oil had been
stable at $21-$23 per barrel since October 1996 while prices of
petroleum products in the world market had been stable since
mid-December of last year.Moreover, crude oil prices are beginning
to soften for the last few days while prices of some petroleum
products had already declined;and (iii) the exchange rate of the
peso in relation to the US dollar has been stable for the past
twelve (12) months, averaging at aroundP26.20 to one US dollar;
WHEREAS, Executive Order No. 377 dated 31 October 1996 provides
for an institutional framework for the administration of the
deregulated industry by defining the functions and responsibilities
of various government agencies;
WHEREAS, pursuant to Republic Act No. 8180, the deregulation of
the industry will foster a truly competitive market which can
better achieve the social policy objectives of fair prices and
adequate, continuous supply of environmentally-clean and high
quality petroleum products;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of
the Philippines, by the powers vested in me by law, do hereby
declare the full deregulation of the downstream oil industry."
In assailing section 15 of R.A. No. 8180 and E.O. No. 392,
petitioners offer the following submissions:
First, section 15 of R.A. No. 8180 constitutes an undue
delegation of legislative power to the President and the Secretary
of Energy because it does not provide a determinate or determinable
standard to guide the Executive Branch in determining when to
implement the full deregulation of the downstream oil
industry.Petitioners contend that the law does not define when it
is practicable for the Secretary of Energy to recommend to the
President the full deregulation of the downstream oil industry or
when the President may consider it practicable to declare full
deregulation.Also, the law does not provide any specific standard
to determine when the prices of crude oil in the world market are
considered to be declining nor when the exchange rate of the peso
to the US dollar is considered stable.
Second, petitioners aver that E.O. No. 392 implementing the full
deregulation of the downstream oil industry is arbitrary and
unreasonable because it was enacted due to the alleged depletion of
the OPSFfund -- a condition not found in R.A. No. 8180.
Third, section 15 of R.A. No. 8180 and E.O. No. 392 allow the
formation of ade factocartel among the three existing oil companies
-- Petron, Caltex and Shell -- in violation of the constitutional
prohibition against monopolies, combinations in restraint of trade
and unfair competition.
Respondents, on the other hand, fervently defend the
constitutionality of R.A. No. 8180 and E.O. No. 392.In addition,
respondents contend that the issues raised by the petitions are not
justiciable as they pertain to the wisdom of the law.Respondents
further aver that petitioners have nolocus standias they did not
sustain nor will they sustain direct injury as a result of the
implementation of R.A. No. 8180.
The petitions were heard by the Court on September 30, 1997.On
October 7, 1997, the Court ordered the private respondents oil
companies "to maintain the status quo and to cease and desist from
increasing the prices of gasoline and other petroleum fuel products
for a period of thirty (30) days x x x subject to further orders as
conditions may warrant."
We shall now resolve the petitions on the merit.The petitions
raiseprocedural and substantive issues bearing on the
constitutionality of R.A. No. 8180 and E.O. No. 392.Theprocedural
issuesare:(1)whether or not the petitions raise a justiciable
controversy, and(2)whether or not the petitioners have the standing
to assail the validity of the subject law and executive
order.Thesubstantive issuesare:(1)whether or not section 5 (b)
violates the one title - one subject requirement of the
Constitution; (2)whether or not thesame section violates the equal
protection clause of the Constitution; (3)whether or not section 15
violates the constitutional prohibition on undue delegation of
power; (4)whether or not E.O. No. 392 is arbitrary and
unreasonable; and (5)whether or not R.A. No. 8180 violates the
constitutional prohibition against monopolies, combinations in
restraint oftrade and unfair competition.
We shall first tackle the procedural issues.Respondents claim
that the avalanche of arguments of the petitioners assail the
wisdom of R.A. No. 8180.They aver that deregulation of the
downstream oil industry is a policy decision made by Congress and
it cannot be reviewed, much less be reversed by this Court.In
constitutional parlance, respondents contend that the petitions
failed to raise a justiciable controversy.
Respondents' joint stance is unnoteworthy.Judicial power
includes not only the duty of the courts to settle actual
controversies involving rights which are legally demandable and
enforceable, but also the duty to determine whether or not there
has been grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the
government.[12]The courts, as guardians of the Constitution, have
the inherent authority to determine whether a statute enacted by
the legislature transcends the limit imposed by the fundamental
law.Where a statute violates the Constitution, it is not only the
right but the duty of the judiciary to declare such act as
unconstitutional and void.[13]We held in the recent case ofTanada
v. Angara:[14]"x x x
In seeking to nullify an act of the Philippine Senate on the
ground that it contravenes the Constitution, the petition no doubt
raises a justiciable controversy.Where an action of the legislative
branch is seriously alleged to have infringed the Constitution, it
becomes not only the right but in fact the duty of the judiciary to
settle the dispute.The question thus posed is judicial rather than
political.The duty to adjudicate remains to assure that the
supremacy of the Constitution is upheld.Once a controversy as to
the application or interpretation of a constitutional provision is
raised before this Court, it becomes a legal issue which the Court
is bound by constitutional mandate to decide."
Even a sideglance at the petitions will reveal that petitioners
have raised constitutional issues which deserve the resolution of
this Court in view of their seriousness and their value as
precedents.Our statement of facts and definition of issues clearly
show that petitioners are assailing R.A. No. 8180 becauseits
provisions infringethe Constitution and not because the lawlacks
wisdom.The principle of separation of power mandates that
challenges on the constitutionality of a law should be resolved in
our courts of justice while doubts on the wisdomof a law should be
debated in the halls of Congress.Every now and then, a law may be
denounced in court both as bereft of wisdom and constitutionally
infirmed.Such denunciation will not deny this Court of its
jurisdiction to resolve the constitutionality of the said law while
prudentially refusing to pass on its wisdom.
The effort of respondents to question thelocus standiof
petitioners must also fall on barren ground.In language too lucid
to be misunderstood, this Court has brightlined its liberal stance
on a petitioner'slocus standiwhere the petitioner is able to craft
an issue oftranscendental significance to the
people.[15]InKapatiran ng mga Naglilingkod sa Pamahalaan ng
Pilipinas, Inc. v. Tan,[16]we stressed:
"x x x
Objections to taxpayers' suit for lack of sufficient
personality, standing or interest are, however, in the main
procedural matters.Considering the importance to the public of the
cases at bar, and in keeping with the Court's duty, under the1987
Constitution, to determine whether or not the other branches of
government have kept themselves within the limits of the
Constitution and the laws and that they have not abused the
discretion given to them, the Court has brushed aside
technicalities of procedure and has taken cognizance of these
petitions."
There is not a dot of disagreement between the petitioners and
the respondents on the far reaching importanceof the validity of RA
No. 8180 deregulating our downstream oil industry.Thus,there is no
good sense in being hypertechnical on the standing of petitioners
for they pose issues which are significant to our people and which
deserve ourforthrightresolution.
We shall now track down the substantive issues.In G.R. No.
124360 where petitioner is Senator Tatad,it is contended that
section 5(b) of R.A. No. 8180 on tariff differential violates the
provision[17]of the Constitution requiring every law to have only
one subject which should be expressed in its title.We do not concur
with this contention.As a policy, this Court has adopted a liberal
construction of the one title - one subject rule.We have
consistently ruled[18]that the title need not mirror, fully index
or catalogue all contents and minute details ofalaw.A law having a
single general subject indicated in the title may contain any
number of provisions, no matter how diverse they may be, so long as
they are not inconsistent with or foreign to the general subject,
and may be considered in furtherance of such subject by providing
for the method and means of carrying out the general subject.[19]We
hold that section 5(b) providing for tariff differential is germane
to the subject of R.A. No. 8180 which is the deregulation of the
downstream oil industry.The section is supposed to sway prospective
investors to put up refineries in our country and make them rely
less on imported petroleum.[20]We shall, however, return tothe
validity ofthis provision when we examine its blocking effect on
new entrants to the oil market.
We shall now slide to the substantive issues in G.R. No.
127867.Petitioners assail section 15 of R.A. No. 8180 which fixes
the time frame for the full deregulation of the downstream oil
industry.We restate its pertinent portion for emphasis,viz.:
"Sec. 15.Implementation of Full Deregulation-Pursuant to section
5(e) of Republic Act No. 7638, the DOE shall, upon approval of the
President, implement the full deregulation of the downstream oil
industry not later than March 1997.As far as practicable, the DOE
shall time the full deregulation when the prices ofcrude oil and
petroleum products in the world market aredecliningand when the
exchangerateofthepeso in relation to the US dollar isstable..."
Petitioners urge that the phrases "as far as practicable,"
"decline of crude oil prices in the world market" and "stability of
the peso exchange rate to the US dollar" are ambivalent, unclear
and inconcrete in meaning. They submit that they do not provide the
"determinate or determinable standards" which can guide the
President in his decision to fully deregulate the downstream oil
industry.In addition, they contend that E.O. No. 392 which advanced
the date of full deregulation is void for it illegallyconsidered
the depletion of the OPSF fund as a factor.
The power of Congress to delegate the execution of laws has long
been settled by this Court.As early as 1916 inCompania General de
Tabacos de Filipinas vs. The Board of Public Utility
Commissioners,[21]this Court thru, Mr. Justice Moreland, held that
"the true distinction is betweenthe delegation of power to makethe
law, which necessarily involves a discretion as to what it shall
be, and conferring authority or discretion as to its execution, to
be exercised underand in pursuance of the law.The first cannot be
done; to the latter no valid objection can be made."Over the years,
as the legal engineering of men's relationship became more
difficult, Congress has to rely moreon the practice of delegating
the execution of laws to the executive and other administrative
agencies.Two tests have been developed to determine whether the
delegation of the power to execute laws does not involve the
abdication of the power to make law itself.We delineated the metes
and bounds of these tests inEastern Shipping Lines, Inc. vs.
POEA,[22]thus:
"There are two accepted tests to determine whether or not there
is a valid delegation of legislative power,viz: the completeness
test and the sufficient standard test. Under the first test, the
law must be complete in all its terms and conditions when it leaves
the legislative such that when it reaches the delegate the only
thing he will have to do is to enforce it.Under the sufficient
standard test, there must be adequate guidelines or limitations in
the law to map out the boundaries of the delegate's authority and
prevent the delegation from running riot.Both tests are intended to
prevent a total transference of legislative authority to the
delegate, who is not allowed to step into the shoes of the
legislature and exercise a power essentially legislative."
The validity of delegating legislative power is now a quiet area
in our constitutional landscape.As sagely observed, delegation of
legislative power has become aninevitability in light of the
increasing complexity of the task of government.Thus, courts bend
as far back as possible to sustain theconstitutionality of laws
which are assailed as unduly delegating legislative
powers.CitingHirabayashi v. United States[23]as authority, Mr.
Justice Isagani A. Cruz states "that even if the law does not
expressly pinpoint the standard, the courts will bend over backward
to locate the same elsewhere in order to spare the statute, if it
can, from constitutional infirmity."[24]Given the groove of the
Court'srulings, the attemptof petitioners to strike down section 15
on the ground of undue delegation of legislative power cannot
prosper.Section 15 can hurdle boththe completeness test and the
sufficient standard test.It will be noted that
Congressexpresslyprovided in R.A. No. 8180 that full deregulation
will start at the end of March 1997, regardless of the occurrence
of any event.Full deregulation at the end of March 1997 is
mandatory and the Executive has no discretion to postpone it for
any purported reason.Thus, the law is complete on the question of
the final date of full deregulation.The discretion given to the
President is to advance the date of full deregulation before the
end of March 1997.Section 15 lays down the standard toguide the
judgment of the President--- he is to time it as faras
practicablewhen the prices of crude oil and petroleum products in
the world market aredecliningand when the exchange rate of the peso
in relation to the US dollar isstable.
Petitioners contend that the words "as far as practicable,"
"declining" and "stable" should have been defined in R.A. No. 8180
asthey do not set determinate or determinable standards. The
stubborn submission deserves scant consideration.The dictionary
meanings of these words are well settled and cannot confuse men of
reasonable intelligence.Webster defines "practicable" as meaning
possible to practice or perform,"decline" asmeaning to take a
downward direction, and "stable" as meaning firmly
established.[25]The fear of petitioners that these words will
result in the exercise of executive discretion that will run riot
is thus groundless.To be sure, the Court has sustainedthe validity
of similar, if not more generalstandards in other cases.[26]It
ought to follow that the argumentthat E.O. No. 392 isnull and void
as itwas based on indeterminate standards set by R.A. 8180 must
likewise fail. If that were all to the attack againstthe validity
of E.O. No. 392, the issue need not further detain our
discourse.But petitioners further posit the thesis that the
Executive misapplied R.A. No. 8180 when it considered the depletion
of the OPSF fund as a factor in fully deregulating the downstream
oil industry in February 1997.A perusal of section 15 of R.A. No.
8180 will readily reveal that it onlyenumeratedtwo factors to be
considered by the Department of Energy and the Office of the
President,viz.:(1)the time when the prices of crude oil and
petroleum products in the world market are declining, and (2)the
time when the exchange rate of the peso in relation to the US
dollar is stable.Section 15 did not mention the depletion of the
OPSF fund as a factor to be given weight by the Executive before
ordering full deregulation.On the contrary, the debates in Congress
willshow that someofour legislators wanted to impose as a
pre-condition to deregulation a showing that the OPSF fund must not
be in deficit.[27]We therefore hold thatthe Executive department
failed tofollow faithfully the standards set by R.A.No. 8180 when
it considered the extraneousfactor of depletion of the OPSF
fund.The misappreciation of this extra factor cannot be justified
on the ground thatthe Executive department considered anyway the
stability of the prices of crude oil in the world market and the
stability of the exchange rate of the peso to the dollar.By
considering another factor to hasten full deregulation, the
Executive department rewrote the standards set forth in R.A.
8180.The Executive is bereft of anyrightto altereither by
subtraction or additionthe standards set inR.A. No. 8180for it has
no power to make laws.To cede to the Executive the power to make
law is to invite tyranny, indeed, to transgress the principle of
separation of powers.The exercise of delegated power is given a
strict scrutiny by courts for the delegate is a mere agent whose
action cannot infringe the terms of agency.In the cases at bar, the
Executive co-mingled the factor of depletion of the OPSFfund with
the factors of declineof the price of crude oil in the world market
and the stability of the peso to the US dollar.On the basis of the
text of E.O. No. 392, it isimpossible to determine the weight given
by the Executive department to the depletion of the OPSF fund.It
could wellbe the principal consideration for the early
deregulation.It could have been accorded an equal significance.Or
its importance couldbe nil.In light of this uncertainty, we rule
that the early deregulation under E.O. No. 392 constitutes a
misapplication ofR.A. No.8180.
We now come to grips with the contention that some provisions of
R.A.No. 8180 violate section 19 of Article XII of the 1987
Constitution.These provisions are:
(1) Section 5 (b) which states- "Anylaw to the contrary
notwithstanding and starting with the effectivity of this Act,
tariff duty shall be imposed and collected on imported crude oil at
the rate of three percent (3%) and imported refined petroleum
products at the rate of seven percent (7%) except fuel oil and LPG,
the rate for which shall be the same as that for imported crude
oil.Provided, that beginning on January 1, 2004 the tariff rate on
imported crude oil and refined petroleum products shall be the
same.Provided, further, that this provision may be amended only by
an Act of Congress."
(2) Section 6 which states - "To ensure the security and
continuity of petroleum crude and products supply, the DOE shall
require the refiners and importers to maintain a minimum inventory
equivalent to ten percent (10%) of their respective annual sales
volume or forty (40) days of supply,whichever is lower," and
(3) Section 9 (b) which states - "To ensure fair competition and
prevent cartels and monopolies in the downstream oil industry, the
following acts shall be prohibited:
x x x
(b)Predatory pricing which means selling or offering to sell any
product at a price unreasonably below the industry average cost so
as to attract customers to the detriment of competitors."
On the other hand, section 19 of Article XII of the Constitution
allegedly violated by the aforestated provisions of R.A. No. 8180
mandates:"The State shall regulate or prohibit monopolies when the
public interest so requires.No combinations inrestraint of trade or
unfair competition shall be allowed."
A monopoly is a privilege or peculiar advantage vested in one or
more persons or companies, consisting in the exclusive right or
power to carry on a particular business or trade, manufacture a
particular article, or control the sale or the whole supply of a
particular commodity.It is a form of market structure in which one
or only a few firms dominate the total sales of a product or
service.[28]On the other hand, a combination in restraint of trade
is an agreement or understanding between two or more persons, in
the form of a contract, trust, pool, holding company, or other form
of association, for the purpose of unduly restricting competition,
monopolizing trade and commerce in a certain commodity, controlling
its production, distribution and price, or otherwise interfering
with freedom of trade without statutory authority.[29]Combination
in restraint of trade refers to the means while monopoly refers to
the end.[30]Article 186 of the Revised Penal Code and Article 28 of
the New Civil Code breathe life to this constitutional
policy.Article 186 of the Revised Penal Code penalizes
monopolization and creation ofcombinations in restraint of
trade,[31]while Article 28 of the New Civil Code makes any person
who shall engage in unfair competition liable for
damages.[32]Respondents aver thatsections 5(b), 6 and 9(b)
implement the policies and objectives of R.A. No. 8180.They explain
that the 4% tariff differential is designed to encourage new
entrants to invest in refineries.They stress that the inventory
requirement is meant to guaranty continuous domestic supply of
petroleum and to discourage fly-by-night operators.They also submit
that the prohibition against predatory pricing is intended to
protectprospective entrants.Respondents manifested to the Court
that new players have entered the Philippines after deregulation
and have now captured 3% - 5% of theoil market.
Thevalidity of the assailed provisions of R.A. No. 8180has to be
decided in light of the letter and spirit of our Constitution,
especially section 19, Article XII.Beyond doubt, the Constitution
committed us to the free enterprise system but it is a system
impressed withits own distinctness. Thus, while the
Constitutionembracedfree enterprise as an economic creed, it did
not prohibit per se the operation of monopolies which can, however,
be regulated in the public interest.[33]Thus too, our free
enterprise system is not based on a market of pure and
unadulterated competition where the State pursues a stricthands-off
policy andfollows the let-the-devil devour the hindmost
rule.Combinations in restraint of trade and unfair competitions are
absolutely proscribed and the proscription is directed both against
the State as well as the private sector.[34]This distinctfree
enterprise system is dictated by the need to achieve the goals of
our national economy as defined by section 1, Article XII of the
Constitution which are:more equitable distribution of
opportunities, income and wealth; a sustainedincrease in the amount
of goods and services produced by the nation for the benefit of the
people; and an expanding productivity as the key to raising the
quality of life for all, especially the underprivileged.It also
calls for the State to protect Filipino enterprises against unfair
competition and trade practices.
Section 19, Article XII of our Constitutionis anti-trust in
history and in spirit.It espousescompetition.The desirability
ofcompetition is the reason for the prohibition against restraint
of trade, the reason for the interdiction of unfair competition,
and thereason for regulation of unmitigated monopolies.Competition
is thus the underlying principle of section 19, Article XII of our
Constitutionwhich cannot be violated byR.A. No. 8180.We subscribe
to the observation ofProf.Gellhornthat the objective of anti-trust
law is "to assure a competitive economy, based upon the belief that
through competition producers will strive to satisfy consumer wants
at the lowest price with the sacrifice of the fewest
resources.Competition among producers allows consumers to bid for
goods and services, and thus matches their desires with society's
opportunity costs."[35]He addswith appropriateness that there is a
reliance upon "the operation of the `market' system (free
enterprise) to decide what shall be produced, how resources shall
beallocated in the production process, and to whom the various
products will be distributed.The market system relies on the
consumer to decide what and how much shall be produced, and on
competition, among producers to determine who will manufacture
it."
Again, we underline in scarlet that the fundamental principle
espoused by section 19, Article XII of the Constitution is
competition for it alone can release the creative forces of the
market.But thecompetition that can unleash these creative forces is
competition that is fightingyet is fair.Ideally, this kind of
competition requires the presence of not one, not just a few but
several players.A market controlledby one player (monopoly) or
dominated by a handful of players (oligopoly) is hardly the market
where honest-to-goodness competition will prevail.Monopolisticor
oligopolistic marketsdeserve our careful scrutiny and laws which
barricade the entry points of new players in the market should be
viewed with suspicion.
Prescinding from these baseline propositions,we shall proceed to
examine whether the provisions of R.A. No. 8180 on tariff
differential, inventory reserves, and predatory prices imposed
substantial barriers to the entry and exit of new players in our
downstream oil industry.If they do, they have to be struck down for
theywill necessarily inhibit the formation of a truly competitive
market.Contrariwise, if they are insignificant impediments,they
need not be stricken down.
In the cases at bar, itcannot be denied that ourdownstream oil
industry isoperated and controlled by an oligopoly, a foreign
oligopoly at that.Petron, Shell and Caltex stand asthe only
majorleague players in the oilmarket.All other playersbelong tothe
lilliputian league.As the dominant players, Petron, Shell and
Caltex boast of existing refineries of various capacities.The
tariff differential of 4%thereforeworks to theirimmense
benefit.Yet, this is only one edge of the tariff differential.The
other edge cuts and cuts deep in the heart of their competitors.It
erectsa high barrier to the entry of new players.New players that
intend to equalize the market power of Petron, Shell and Caltex by
buildingrefineriesof their own will have to spendbillions of
pesos.Those who will not build refineries but compete with them
will suffer the huge disadvantage of increasing their product cost
by 4%.They will be competing on an uneven field.The argument that
the 4% tariff differentialis desirable because it will induce
prospective players to invest in refineries puts the cart before
the horse.The first need is to attract new players and they cannot
be attracted by burdening them with heavy disincentives.Without new
players belonging to the league of Petron, Shell and Caltex,
competition in our downstream oil industryisan idle dream.
The provision on inventory widens the balance of advantage
ofPetron, Shell and Caltex againstprospective new players.Petron,
Shell and Caltex can easily comply with the inventory requirement
of R.A. No. 8180 in view of their existing storage
facilities.Prospective competitors again will find compliance with
this requirement difficult as it will entail a prohibitive cost.The
construction cost of storage facilities and the cost of inventory
can thus scare prospective players.Their net effect is to further
occlude the entry points of new players, dampen competition and
enhance the control of the market by the three (3) existing oil
companies.
Finally, we come to the provision on predatory pricing which is
defined as "x x x selling or offering to sell any product at a
price unreasonably below the industry average cost so as to attract
customers to the detriment of competitors."Respondents contend that
this provision works against Petron, Shell and Caltex and
protectsnew entrants.The ban onpredatory pricing cannotbe analyzed
in isolation.Its validity is interlocked with the barriers imposed
by R.A. No. 8180 on the entry of new players.The inquiry should be
to determine whether predatory pricing on the part of the dominant
oil companies is encouragedby theprovisions in the law blocking the
entry of new players.Text-writerHovenkamp,[36]gives the
authoritative answer and we quote:
"x x x
"The rationale for predatory pricing is the sustaining of losses
today that will give a firm monopoly profits in the future.The
monopoly profits will never materialize, however, if the market is
flooded with new entrants as soon as the successful predator
attempts to raise its price.Predatorypricing will be profitable
only if the market contains significant barriers to new entry."
As aforediscussed, the 4% tariff differential and the inventory
requirement aresignificant barriers which discourage new players to
enter the market.Considering these significant barriers established
by R.A. No. 8180 and the lack of players with the comparable clout
of PETRON, SHELL and CALTEX, thetemptation fora dominant playerto
engagein predatory pricingand succeed is a chilling
reality.Petitioners'chargethat this provision on predatory pricing
isanti-competitive isnot without reason.
Respondents belittle these barriers with the allegation that new
players have entered the market since deregulation.A scrutiny of
the list of the allegednew players will, however, revealthat not
one belongs to the class and category of PETRON, SHELL and
CALTEX.Indeed, there is no showing that any of these new players
intends to install any refinery and effectively compete with these
dominant oil companies.In any event, it cannot be gainsaid that the
new players couldhave been more in number and more impressivein
might ifthe illegalentrybarriers in R.A. No. 8180 were not
erected.
We come to the final point.We now resolve thetotal effectof the
untimelyderegulation, the imposition of 4% tariff differential on
imported crude oil and refined petroleum products,the requirementof
inventory and the prohibition on predatory pricing on the
constitutionality of R.A. No. 8180.The question is whether these
offending provisions can beindividually struck down without
invalidating the entire R.A. No. 8180.The ruling case law iswell
stated by authorAgpalo,[37]viz.:
"x x x
Thegeneral rule is that where part of a statute is void as
repugnant to the Constitution, while another part is valid, the
valid portion, if separable from the invalid, may stand and be
enforced.The presence of a separability clause in a statute creates
the presumption that the legislature intended separability, rather
than complete nullity of the statute.To justify this result, the
valid portion must be so far independent of the invalid portion
that it is fair to presume that the legislature would have enacted
it by itself if it had supposed that it could not constitutionally
enact the other.Enough must remain to make a complete, intelligible
and valid statute, which carries out the legislative intent.x x
x
Theexception to the general ruleis that when the parts of a
statute are so mutually dependent and connected, as conditions,
considerations, inducements, or compensations for each other, as to
warrant a belief that the legislature intended them as a whole, the
nullity of one part will vitiate the rest.In making the parts of
the statute dependent, conditional, or connected with one another,
the legislature intended the statute to be carried out as a whole
and would not have enacted it if one part is void, in which case if
some parts are unconstitutional, all the other provisions thus
dependent, conditional, or connected must fall with them."
R.A. No. 8180 contains a separability clause.Section 23 provides
that "if for any reason, any section or provision of this Act is
declared unconstitutional or invalid, such parts not affected
thereby shall remain in full force and effect."This separability
clause notwithstanding, we hold that the offending provisions of
R.A. No. 8180 so permeate its essence that the entire law has to be
struck down.The provisions on tariff differential, inventory and
predatory pricing are among the principal props of R.A. No. 8180.
Congress could not have deregulated the downstream oil
industrywithout these provisions.Unfortunately,contrary to their
intent,these provisions on tariff differential, inventory and
predatory pricinginhibit fair competition, encourage monopolistic
power and interfere withthe free interaction of market forces.R.A.
No. 8180 needs provisions tovouchsafefree and fair competition.The
need for these vouchsafing provisions cannot be overstated.Before
deregulation, PETRON, SHELL and CALTEX had no real competitors but
did not have a free run of the market because government controls
both the pricing and non-pricing aspects of the oil industry.After
deregulation, PETRON, SHELL and CALTEX remainunthreatened by real
competition yetare no longer subject to control by government with
respect to their pricing and non-pricing decisions.The aftermath of
R.A. No. 8180 is aderegulated market where competition can be
corrupted and where market forces can be manipulated by
oligopolies.
Thefall out effects of the defects ofR.A. No. 8180 on our people
have not escaped Congress.A lot of our leading legislators have
come out openly withbillsseeking the repeal of these odious and
offensive provisions in R.A. No. 8180.In the Senate,Senator Freddie
Webbhas filed S.B. No. 2133 which is the result of the hearings
conducted by the Senate Committee on Energy.The hearings revealed
that(1)there was a need to level the playing field for the new
entrants in the downstream oil industry, and (2)there was no law
punishing a person for selling petroleum products at unreasonable
prices.Senator Alberto G. Romuloalso filed S.B. No. 2209 abolishing
the tariff differentialbeginning January 1, 1998.He declared
thatthe amendment "x x xwould mean that instead of just three (3)
big oil companies there will be other major oil companies to
provide more competitive prices for the market and the consuming
public."Senator Heherson T. Alvarez,one oftheprincipal proponentsof
R.A. No. 8180,also filed S.B. No. 2290 increasing the penalty for
violation of its section 9.It is his opinion as expressed in the
explanatory note of the bill thatthe present oil companies are
engaged in cartelization despite R.A. No. 8180,viz,:
" x x x
"Since the downstream oil industry was fully deregulated in
February 1997, there have been eight (8) fuel price adjustments
made by the three oil majors, namely:Caltex Philippines, Inc.;
Petron Corporation; and Pilipinas Shell Petroleum Corporation.Very
noticeable in the price adjustments made, however, is the
uniformity in the pump prices of practically all petroleum products
of the three oil companies. This, despite the fact, that their
selling rates should be determined by a combination of any of the
following factors:the prevailing peso-dollar exchange rate at the
time payment is made for crude purchases, sources of crude, and
inventory levels of both crude and refined petroleum products. The
abovestated factors should have resulted in different, rather than
identical prices.
The fact that the three (3) oil companies' petroleum products
are uniformly priced suggests collusion, amounting to
cartelization, among Caltex Philippines, Inc., Petron Corporation
and Pilipinas Shell Petroleum Corporation to fix the prices of
petroleum products in violation of paragraph (a), Section 9 of R.A.
No. 8180.
To deter this pernicious practice and to assure that present and
prospective players in the downstream oil industry conduct their
business with conscience and propriety, cartel-like activities
ought to be severely penalized."
Senator Francisco S. Tatadalso filed S.B. No. 2307 providing for
a uniform tariff rate on imported crude oil and refined petroleum
products.In the explanatory note of the bill, he declared in no
uncertain terms that "x x xthe present set-uphas raised serious
public concern over the way the three oil companies have uniformly
adjusted the prices of oil in the country,an indication of a
possible existence of a cartel or a cartel-like situation within
the downstream oil industry.This situation is mostly attributed to
the foregoing provision on tariff differential, which has
effectively discouraged the entry of new players in the downstream
oil industry."
In the House of Representatives, the moves to rehabilitateR.A.
No. 8180 are equallyfeverish.Representative Leopoldo E. San
Buenaventurahas filed H.B. No. 9826 removing the tariff
differential for imported crude oil and imported refined petroleum
products.In the explanatory note of the bill, Rep. Buenaventura
explained:
"x x x
As we now experience, this difference in tariff rates between
imported crude oil and imported refined petroleum
products,unwittingly provided a built-in-advantage for the three
existing oil refineries in the country and eliminating competition
which is a must in a free enterprise economy.Moreover, it created a
disincentive for other players to engage even initially in the
importation and distribution of refined petroleum products and
ultimately in the putting up of refineries.This tariff differential
virtually created a monopoly of the downstream oil industry by the
existing three oil companiesas shown by their uniform and
capricious pricing of their products since this law took effect, to
the great disadvantage of the consuming public.
Thus, instead of achieving the desired effects of deregulation,
that of free enterprise and a level playing field in the downstream
oil industry, R.A. 8180 has created an environment conducive to
cartelization, unfavorable, increased, unrealistic prices of
petroleum products in the country by the three existing
refineries."
Representative Marcial C. Punzalan, Jr.,filed H.B. No. 9981 to
prevent collusion among the present oil companies by strengthening
the oversight function ofthe government, particularly its ability
to subject to a review any adjustment in the prices of gasoline and
other petroleum products.In the explanatory note of the bill, Rep.
Punzalan, Jr., said:
"x x x
To avoid this, the proposed bill seeks to strengthen the
oversight function of government, particularly its ability to
review the prices set for gasoline and other petroleum products.It
grants the Energy Regulatory Board (ERB) the authority to review
prices of oil and other petroleum products, as may be petitioned by
a person, group or any entity, and to subsequently compel any
entity in the industry to submit any and all documents relevant to
the imposition of new prices.In cases where the Board determines
that there exist collusion, economic conspiracy, unfair trade
practice, profiteering and/or overpricing, it may take any step
necessary to protect the public, including the readjustment of the
prices of petroleum products.Further, the Board may also impose the
fine and penalty of imprisonment, as prescribed in Section 9 of
R.A. 8180, on any person or entity from the oil industry who is
found guilty of such prohibited acts.
By doing all of the above, the measure will effectively provide
Filipino consumers with a venue where their grievances can be heard
and immediately acted upon by government.
Thus, this bill stands to benefit theFilipino consumer by making
the price-setting process more transparent and making it easier to
prosecute those who perpetrate such prohibited acts as collusion,
overpricing, economic conspiracy and unfair trade."
Representative Sergio A.F. Apostolfiled H.B. No. 10039 to remedy
anomissionin R.A. No. 8180 where there isno agency in government
that determines what is "reasonable" increase in the prices ofoil
products.Representative Dante O. Tinga, one of theprincipal
sponsorsof R.A. No. 8180,filed H.B. No. 10057 to strengthen its
anti-trust provisions.He elucidatedin its explanatory note:
x x x
The definition of predatory pricing, however, needs to be
tightened up particularly with respect to the definitive benchmark
price and the specific anti-competitive intent.The definition in
the bill at hand which was taken from the Areeda-Turner test in the
United States on predatory pricing resolves the questions.The
definition reads, `Predatory pricing means selling or offering to
sell any oil product at a price below the average variable cost for
the purpose of destroying competition, eliminating a competitor or
discouraging a competitor from entering the market.'
The appropriate actions which may be resorted to under the Rules
of Court in conjunction with the oil deregulation law are adequate.
But to stress their availability and dynamism, it is a good move to
incorporate all the remedies in the law itself.Thus, the present
bill formalizes the concept of government intervention and private
suits to address the problem of antitrust violations.Specifically,
the government may file an action to prevent or restrain any act of
cartelization or predatory pricing, and if it has suffered any loss
or damage by reason of the antitrust violation it may recover
damages.Likewise, a private person or entity may sue to prevent or
restrain any such violation which will result in damage to his
business or property, and if he has already suffered damage he
shall recover treble damages.A class suit may also be allowed.
To make the DOE Secretary more effective in the enforcement of
the law, he shall be given additional powers to gather information
and to require reports."
Representative Erasmo B. Damasingfiled H.B. No. 7885 and has a
more unforgivingview of R.A. No. 8180.He wants it completely
repealed.He explained:
"x x x
Contrary to the projections at the time the bill on the
Downstream Oil Industry Deregulation was discussed and debated upon
in the plenary session prior to its approval into law, there aren't
any new players or investors in the oil industry.Thus, resulting in
practically a cartel or monopoly in the oil industry by the three
(3) big oil companies, Caltex, Shell and Petron.So much so, that
with the deregulation now being partially implemented, the said oil
companies have succeeded in increasing the prices of most of their
petroleum products with little or no interference at all from the
government.In the month of August, there wasan increase of Fifty
centavos (50)per liter by subsidizing the same with the OPSF, this
is only temporary as in March 1997, or a few months from now, there
will be full deregulation (Phase II) whereby the increase in the
prices of petroleum products will be fully absorbed bythe consumers
since OPSF will already be abolished by then.Certainly, this would
make the lives of our people, especially the unemployed ones,
doubly difficult and unbearable.
The much ballyhooed coming in of new players in the oil industry
is quite remote considering that these prospectiveinvestors cannot
fight the existing and well established oil companies in the
country today, namely, Caltex, Shell and Petron.Even if these new
players will come in, theywill still have no chance to compete with
the said three (3) existing big oil companiesconsidering that there
is an imposition of oil tariff differential of 4% between
importation of crude oil by the said oil refineries paying only 3%
tariffrate for the said importation and 7% tariff rate to be paid
by businessmen who have no oil refineries in the Philippines but
will import finished petroleum/oil products which is being taxed
with 7% tariff rates.
So, if only to helpthe many who are poor from further suffering
as a result of unmitigated increase in oil products due to
deregulation, it is a must that the Downstream Oil Industry
Deregulation Act of 1996, or R.A. 8180 be repealed completely."
Variousresolutionshave also been filed in the Senate calling for
animmediate and comprehensive reviewof R.A. No. 8180to preventthe
downpour ofits illeffects on the people.Thus, S. Res.No. 574 was
filed bySenator Gloria M. Macapagalentitled Resolution "Directing
the Committee on Energy to Inquire Into The Proper Implementation
of the Deregulation of the Downstream Oil Industry and Oil Tax
Restructuring As Mandated Under R.A. Nos. 8180 and 8184, In Order
to Make The Necessary Corrections In the Apparent Misinterpretation
Of The Intent And Provision Of The Laws And Curb The Rising Tide Of
Disenchantment Among The Filipino Consumers And Bring About The
Real IntentionsAnd Benefits Of The Said Law."Senator Blas P.
Oplefiled S. Res. No. 664 entitledresolution "Directing the
Committee on Energy To Conduct An Inquiry In AidOf Legislation
ToReview The Government's Oil Deregulation Policy In Light Of The
Successive Increases In Transportation, Electricity And Power
Rates,As well As Of Food And Other Prime Commodities And Recommend
Appropriate Amendments To Protect The ConsumingPublic." Senator
Opleobserved:
"x x x
WHEREAS, since the passage of R.A. No. 8180, the Energy
Regulatory Board (ERB) has imposed successive increases in oil
prices which has triggered increases in electricity and power
rates, transportation fares, as well as in prices of food and other
prime commodities to the detriment of our people, particularly the
poor;
WHEREAS, the new players that were expected to compete with the
oil cartel-Shell, Caltex and Petron-have not come in;WHEREAS, it is
imperative that a review of the oil deregulation policy be made to
consider appropriate amendments to the existing law such as an
extension of the transition phase before full deregulation in
orderto give the competitive market enough time to develop;
WHEREAS, the review can include the advisability of providing
some incentives in order to attract the entry of new oil companies
to effect a dynamic competitive market;
WHEREAS, it may also be necessary to defer the setting up of the
institutional framework for full deregulation of the oil industry
as mandated under Executive Order No. 377 issued by President Ramos
last October 31, 1996 x x x. "
Senator Alberto G. Romulofiled S. Res. No. 769 entitled
resolution "Directing the Committees on Energy and PublicServices
In Aid Of Legislation To Assess The Immediate Medium And Long Term
Impact of Oil Deregulation On Oil Prices And The Economy."Among the
reasons for the resolution is the finding that "therequirement of a
40-day stock inventory effectively limits the entry of other oil
firms in the market with the consequence that instead of going down
oil prices will rise."
Parallel resolutions have been filed in the Houseof
Representatives.Representative Dante O. Tingafiled H. Res. No. 1311
"Directing The Committee on Energy To Conduct An Inquiry, In Aid of
Legislation, Into The Pricing Policies And Decisions Of The Oil
Companies Since The Implementation of Full Deregulation Under the
Oil Deregulation Act (R.A. No. 8180) For the Purpose of Determining
In the Context Of The Oversight Functions Of Congress Whether The
Conduct Of The Oil Companies, Whether Singly Or Collectively,
Constitutes Cartelization Which Is A Prohibited Act Under R.A. No.
8180, And What Measures Should Be Taken To Help Ensure The
Successful Implementation Of The Law In Accordance With Its Letter
And Spirit, Including Recommending Criminal Prosecution Of the
Officers Concerned Of the Oil Companies If Warranted By The
Evidence, And For Other Purposes."Representatives Marcial C.
Punzalan, Jr. Dante O. Tinga and Antonio E. Bengzon IIIfiled H.R.
No. 894 directing the House Committee on Energy to inquire into the
proper implementation of the deregulation of the downstream oil
industry.House Resolution No. 1013 was also filed byRepresentatives
Edcel C. Lagman, Enrique T. Garcia, Jr. and Joker P. Arroyourging
the President to immediately suspend the implementation of E.O. No.
392.
In recent memory there is no law enacted by the legislature
afflicted with so muchconstitutional deformities as R.A. No.
8180.Yet, R.A. No. 8180 deals with oil, a commodity whose supply
and price affect the ebb and flow of the lifeblood of the
nation.Its shortage of supply ora slight, upward spiral in its
price shakesour economic foundation.Studies show that the areas
most impacted by the movement of oil are food manufacture, land
transport, trade, electricity and water.[38]At a time when our
economy is in a dangerous downspin, the perpetuation of R.A. No.
8180 threatens to multiply the number of our people with bent backs
and begging bowls.R.A. No. 8180 with its anti-competition
provisions cannot be allowed by this Court to stand even while
Congress is working to remedy its defects.
The Court, however,takesnote of the plea of PETRON, SHELL and
CALTEXto lift our restraining order to enable them to adjust upward
the price of petroleum and petroleum products in view of the
plummeting value of the peso.Their plea, however,will now have to
be addressed to the Energy Regulatory Board as the effect of the
declaration of unconstitutionality of R.A. No. 8180 is to revive
the former laws it repealed.[39]The length of our return to the
regime of regulationdepends on Congress which can fasttrack the
writingof a new law on oil deregulation in accord with the
Constitution.
With this Decision, some circles will chide the Court for
interfering withan economic decision of Congress. Such criticism is
charmless for the Court is annulling R.A. No. 8180 not because it
disagrees with deregulation as an economic policy but because as
cobbled by Congress in its present form,the law violates the
Constitution. The right call therefor should be for Congress
towrite a newoil deregulation lawthat conformswith the Constitution
and not for this Court to shirk its duty of striking down a law
that offends the Constitution.Striking down R.A. No. 8180 may cost
losses in quantifiable terms to the oil oligopolists.But the loss
in tolerating the tampering of our Constitution is not quantifiable
in pesos and centavos.More worthy of protection than the
supra-normal profitsof private corporations is the sanctity ofthe
fundamentalprinciples of the Constitution.Indeed when confronted by
a law violatingthe Constitution,the Court has no option but to
strike it down dead.Lest it is missed, the Constitution is a
covenant thatgrants and guaranteesboththe political andeconomic
rights of the people.The Constitution mandates this Court to be the
guardian not only of the people's political rights but their
economic rights as well.The protection of the economic rightsof the
poor and the powerlessis of greaterimportanceto themfor they are
concerned more with the exoterics of living and less with the
esoterics of liberty.Hence, for as long as the Constitution reigns
supreme so long will this Court be vigilant in upholdingthe
economic rights of our peopleespecially from the onslaught of the
powerful.Our defense of the people'seconomic rights may appear
heartless becauseit cannot be half-hearted.
IN VIEW WHEREOF, the petitions are granted.R.A. No. 8180 is
declared unconstitutional and E.O. No. 372 void.
SO ORDERED.